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Oracle for 2<sup>nd</sup> development center in China

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CIOL Bureau
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Tony Munroe

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HONG KONG: International software giant Oracle Corp, which will open its

first development center in China by June, said on Tuesday it is already

planning a second center to be located in the capital Beijing.

Oracle, which cited weak Asia sales as a contributor to its earnings decline

in the quarter ended February 28, also said that while some heartening signs

have emerged in recent weeks, customers in Asia are still window-shopping

instead of buying.

Oracle sells big-ticket database and business management software to

enterprise users. "I still think that it's going to be some way down the

track before we're going to see a general recovery (in the region including

Japan)," Derek Williams, Asia-Pacific executive vice president, told

Reuters in an interview.

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China and India are better stories, Williams said, referring to the two

vibrant markets as the "jewels" in Oracle's regional crown. China is

Oracle's second biggest market in Asia after Japan, and is the firm's

fastest-growing market globally.

In March, California-based Oracle announced plans to open a development

center in Shenzhen, the southern Chinese boomtown that borders Hong Kong. It

will initially have about 100 staff developing applications geared to the

mainland market.

Williams said Oracle's Beijing center would operate on a similar scale but

focus more on applications for government use. Governments account for 40-50

percent of Oracle's sales in typical markets. He declined to give a timetable

for when the Beijing center would open, but said: "It's not if, it's

when."

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Unlike Oracle's 2,000-person development center in India, which does generic

research and development for the global market, Oracle's mainland centers will

focus on China. "The more localized your software is, the faster will be

your take-up rate," Williams said.

He said there were ample opportunities in China as customers upgrade their

operations in order to meet growing competition from outsiders following the

country's entry to the World Trade Organization. Beijing is also likely to see

an information technology boom as it prepares to host the 2008 Olympic Games.

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Browsing, not buying



Throughout Asia, Williams said vendors of big systems software -- not just
Oracle -- are waiting for customers to get back into a spending mood.

"Projects are just not getting approved," he said.

In its third quarter that ended in February, Asia-Pacific database sales for

Oracle were down 34 percent from a year earlier, weighed down especially by

weakness in Japan. Still, the picture is not as dire as in the past three

months.

"At least we now see projects being developed," Williams said.

"That wasn't happening at all, six to eight to 12 weeks ago." Project

managers are bringing proposals to the people in their organizations that

control the budgets, he said.

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"What's happening now is that when that executive sponsor takes it to

his board, the board is not approving it. They are still delaying and

deferring," he said. In particular, markets that are part of the US supply

chain must wait for a recovery in the American tech sector, Williams said,

citing Japan, Taiwan and Singapore.

On the brighter side, some Korean industrial giants -- Samsung Electronics

for one -- have begun recently investing in new facilities, Williams said. But

in general, he said, softness persists in countries awaiting a US recovery.

"SAP and the others -- IBM (International Business Machines) -- I think,

are all finding exactly the same situation," Williams said, referring to

two key rivals.

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